Entrepreneurs such as Steve Jobs and Elon Musk are known for their success but also for their public failures. For instance, Jobs’ unsuccessful Macintosh TV launch in 1993 and Musk’s first PayPal product, voted one of the worst business ideas in 1999. Failure is a big part of both men’s success as they learned from their mistakes.
After setting up my own tech startup Flisom, I now know the common dos and don’ts of turning a scientific idea into a commercially viable start-up. Being a tech pioneer is possible, so long as you believe in yourself and have the patience to realise your vision. Ask yourself these questions to demystify entrepreneurship and set out achievable steps.
1. Am I meant to be an entrepreneur?
Doing your own thing can be tempting: why have a boss when you can be your own? But it’s important to understand what being an entrepreneur means. You must recognise that you will be living in – and guiding people through – an uncertain world. Are you prepared to unite people with an unwavering vision, particularly when times are tough? If you feel an entrepreneurial pull, don’t spend too long gaining so-called relevant experience in another company, or waiting until you’ve reached the upper echelons of your career. If you’re tenacious, prepared to learn from your mistakes and to rally people to your vision, go for it.
2. Are you focused on the tech or its value?
Too often tech entrepreneurs, passionate about their inventions, kill off investor pitches with their specialist knowledge. The value is not in the technology itself: you need to show how the product or service can change people’s lives. Exactly how can the technology make things better, easier, faster? Taking a business lens to a technology that solves a problem is the value you bring. To avoid the pitfall of getting caught up in the technology itself, evaluate it dispassionately before you get involved. Seek unbiased advice from a confidant or an expert: avoid falling in love with the idea of falling in love.
3. Is your team too tech-heavy?
Your start-up is based on a tech idea so having technical know-how is critical. But it’s also vital to have a team with complementary skills. Without the right techie specialists an idea stays just an idea – but without the right business brains the technology will never become something your customers want to buy. If you hire too many tech gurus or put the scientific inventor in charge, you risk having to blindly follow their advice. You need a team that believes in your business vision rather than the technical mechanics and a team that’s willing to make sacrifices to go to market. Remember, however bright your team, listen to your gut and never lose your nerve.
4. Do you know what your customers really want?
In 1999, the scientists that I set up Flisom with achieved a new world record efficiency for thin film solar cells, which convert sunlight into electricity. They achieved this through a complex, painfully slow process that meant the cells were produced at prices customers were unwilling to pay. It took another five years to achieve a sensible efficiency for a good price. It proved to me that customers don’t pay for world records, they pay for solutions. To find out what your customers really want, continually ask three questions: does your idea help your customers make money? Does it help them save money? Does it improve their lives?
5. Are you too focused on the finish line?
An entrepreneur’s journey can be long with many twists and turns. Celebrate your milestones to see how far you’ve come. Small wins are an effective way of uniting your team members and building their confidence in you and the business. Enjoying key moments also signals to investors that you’re credible – you do what you say. Future mileposts are also important as they show the route to market and where investors’ money will be used.
6. Do you know what investors really want?
There are many investors – from VCs to strategic investors and sovereign funds to family offices. You must understand the particular needs of your investors: what do they want in return for their cash? To increase your chances of getting funding, patent your technology. Don’t, however, expect all investors to think the same. On the one hand, VCs are more interested in the exit strategy and therefore filing as many patents as possible. On the other hand, strategic investors are concerned in creating a sustainable competitive advantage; the value of the patent to them is ensuring that no other company can replicate the technology.
7. Will you sell?
A successful start-up typically requires multiple rounds of funding. Just as it’s wise to negotiate a loan when you don’t need it, the best time to plan for exit is when you’re just starting out. The more planning you do before you engage investors, the less equity you give away. After achieving your milestones, you will have the chance to sell your equity or the company to a larger player, or IPO. This is your opportunity to support other entrepreneurs as an investor or start the cycle again. Letting go can be hard but if you’ve envisaged selling from the outset it can make the process psychologically easier.
But beyond all the frustrations, the greatest sense of accomplishment springs from the knowledge that the next large game-changing company or, indeed, an entire industry may spring from your guts, wisdom and conviction.
For more insights, refer to the book “From Science to Startup”.